13. Leases

The Company leases office space and equipment. The Company determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

Leases with an initial term of greater than twelve months are recorded on the consolidated balance sheet. Lease expense is recognized on a straight-line basis over the lease term.

The Company’s lease contracts generally do not provide a readily determinable implicit rate. For these contracts, the estimated incremental borrowing rate is based on information available at the inception of the lease.

Operating lease costs were $0.3 million and $0.4 million for each of the three months ended  June 30, 2026 and 2025, respectively. Operating lease costs were $0.7 million and $0.8 million for each of the six months ended  June 30, 2026 and 2025, respectively.  Cash payments for lease liabilities were $0.3 million for the three months ended  June 30, 2026 and 2025, respectively.  Cash payments for lease liabilities were $0.7 million for the six months ended   June 30, 2026 and 2025, respectively.

There were noncash right-of-use asset transactions for the six months ended June 30, 2026. The Company executed lease renewals which were accounted for as modifications and recognized noncash increases for the right-of-use assets obtained in exchange for new operating lease liabilities of approximately $1.8 million during the six months ended June 30, 2026. 

The maturity of operating lease liabilities is presented in the following table (unaudited, in thousands):

Additional information relating to the Company’s operating leases follows (unaudited):